Should a Trim Carpenter Start a Cabinet Business?

Business forum posters think he might do better with a trim business (top finish carpenters can earn a good buck on their own). June 23, 2006

QuestionI am thinking about taking a new direction. I have been a trim carpenter for 15 years, working hourly, and noticed at my last employer that I'm capped out in pay even for my area. I have some experience in custom cabinetry and enjoyed it very much. I'm confident in the aspects of building and customer service and even know how to bid my time and materials to make money, but the legal paperwork I don't understand. Would I need sales contracts for a custom cabinet shop? Would I need a small business license? Would I need to be bonded? If I were to open a custom cabinet and trim installation business, would I separate these two trades as far as contracts? Meaning, 1 requires sales contracts and 1 requires labor contracts? Also, I'm familiar with bidding labor for my trim installs, but does the builder typically find a supplier for materials or would I typically find the supplier and include that in my bid? I'd like to get around any responsibility for materials on the job if I could because of liability for damages, shortages, etc.

Forum Responses(Business and Management Forum)
From contributor B:I don't know what is required where you live. Surely if you've been doing trim work for years, you know some cabinet guys. Ask them. When I started out, I had nothing. No contracts, no business license, nothing. You really need to make some calls and find out what is required where you are. My business isn't bonded. I buy materials. I supply installed cabinets and the builder writes me a check. You'll have to have your insurance for most builders, but you'll need to make some calls.

From contributor A:Why does it have to be a cabinet shop? Skilled trim carpenters are a dying breed, at least around here. Save yourself the headaches and the high overhead and start contracting yourself out for trim carpentry. I am looking for a trim carpenter in my area to do my installs, but I can't find anyone worth a darn. I assume you have the tools, I know you have the connections. Build on what you have and go from there. There is no need to build cabinetry just so you have something to install. Let the cabinetmakers make them, you install them. That is where the real money is anyway. Same thing with finishing. Pound for pound, I make a lot more money finishing what I build than actually building it.
From contributor J:It sounds like you want to go into cabinetmaking to make more money than what you're making now. If this is the case, I don't think you've been reading the forum long enough. I would say your first choice to increase income would be to start building a crew and keeping them busy. Or if you really want to make some money, start doing general remodeling. Those guys make a killing around here. But cabinetmaking is not where the money is at. At least for most of us.
From the original questioner:Thanks for the advice. I was curious about the income difference between building cabinets and installing trim. I enjoy the art of building cabinetry, but am apprehensive about the income. I've read about the pitfalls of that business unless high production is involved, which I am not interested in. Maybe I'll just build in my garage for fun and focus on my sub license.
From contributor N:I don't care where you are, there is a massive need for reliable and quality installers. Very low overhead involved comparatively. Whatever your route, talk to a lawyer familiar with construction classification codes in your state. He will help you find the correct classification for you and let you know what legal documentation you need to have to be fully legitimate in your area. This will give you the correct classification for your insurance needs.
From contributor R:For better or worse, most of the woodworking business owners I know, including me, started off in much the same way as you describe yourself. The evolution from carpenter to businessman seems often to be a result of entrepreneurial spirit frustrated by a subordinate or dead end role in someone else's business. I have seen many ambitious employees strike out on their own, with little except confidence in their woodworking skills, and most of them fail pretty quickly. It takes a whole array of non-woodworking skills and knowledge to run even a small successful business. Also, you have to have capital in reserve, in the right proportion to the size business you intend to build and your short term personal needs, and you need a banking relationship to help shield you from the inevitable small disasters and cash shortfalls that will arise. The very small (one or two man) business also faces the difficulty of doing work and getting work at the same time. You may find yourself working like crazy for a few weeks and then scrounging like crazy for something to do, until you have established yourself and developed a steady flow of work.

I had a one man shop for 5 or 6 years, which I started almost by accident, and I had fun and made a very modest living but did not thrive. Then I got a job with a larger operation and ended up working for other people for 15 years, learning and watching and finding what I was good at. I got the opportunity to buy the business I'm in now and have had good success with it, but I found I still have an enormous amount to learn as an owner. I'm better at being an owner than I was as a cabinetmaker, but that isn't the case for everyone. I have one friend who owns a $10 million a year business and works in the shop everyday, leaving the management to trusted others. Another friend has built an even larger business from scratch and never made a cabinet in his life. It's very important to identify what you are good at and what your long term goals are before starting a business, and also important to evaluate your sensitivity to risk. If you can't handle risk, stay employed.

Talking to shop owners in your area is a valuable way to get some insight on what you really want to do. Working for them is even better. I'd consider it a fair trade to employ an ambitious future competitor for a couple of years in exchange for teaching him something of what I know, even if he ends up going out on his own. At least he would know something about what he's getting into, which would make him much better to bid against than most of the current competition.

From the original questioner:I've been around for a long time in my area and have acquired a pretty good reputation as possibly the best finish carpenter in the area. A few employers had difficulty when I quit, but the reasons I quit were simple. I either wasn't working enough or they couldn't afford me (capped out). So unless I want to make the long commutes for better pay, I need to start my own business. I figure from what I've witnessed, there should be a market for small/medium jobs. Big contractors don't bid on small jobs simply because they have moved on to bigger and better things. My goal is to stay small, stay local and make a decent living. Not interested in getting rich.
From contributor A:It sounds like you might still be hemming about starting a shop, albeit a small one. That is affable. You said you don't plan on getting rich. Why not? What is wrong with trying to get as big a piece of the pie as possible? You have a highly marketable skill and I think you should capitalize on it. You can charge as much for the work as would any other cabinet shop, but without the overhead. If you want to start a hobby shop, fine, but there is big money out there, it just depends on who it goes to. Get a good looking vehicle, preferably a van. Spend some good money on business cards, logo and uniforms. Do good work and look good doing it. If you are as good as you say you are, you will stay busy and make money. Eventually you can add a couple of guys and train them. Before you know it, you might have a good sized operation making some good sized money. If I had it to do over again, I would have just done finishing. The finishers in my area are painters and not wood finishers. I make good money finishing as it is, but I also have a full cabinet shop to support and find work for. I am in too deep to reverse directions now. You only get one chance to do it right the first time. You can always add a cabinet shop later if you really have to, but for now, I would stick with trim work.
From contributor L:I would say to keep with the trim work. There is no reason you can't have a small shop in addition, allowing you to make some cabinetry or built-in pieces where needed. Much smaller outlay than setting up a full cabinet shop. I think you will find that specializing in what you know how to do well already, especially if you are already a known and sought commodity, can be very profitable.

I am a general contractor, mostly remodels, and I find that most of the specialty contractors make better money and have far fewer headaches than I do. Depends on the clients, really, and learning to charge what you are worth - more difficult than it seems like it should.

You should always get a signed contract, whether with the builder or the homeowner. Most states require a business to have a license for tax purposes. In Oregon you need a contractors license if you do installs, but not if you are a supplier (cabinetry, millwork, etc.). Check your state and city website; they will have a link to small business requirements. Most will also have classes, resource lists and forms to inform you of what you need to do, where to take management classes, and what your basic bookkeeping needs will be (they want you making money so you will pay as much in taxes as possible - good resources, and mostly free if you don't look too deep).

From contributor G:We had that same conversation in our office (dinner table).We install trim in mid- to high-end homes in the Atlanta area. People who do what we do and care about it are hard to find. The problem here (Atlanta) is the cornice crew thinking they can do it, and underbidding us by thousands on a job. We all know the end results - hack job. Not to point the finger, but if you're are at the top of your game, get your WC and liability and enjoy the rewards for the skills you have. It is right at your fingertips - just grab it.
From contributor O:Ditto that. I was just talking to a trim carpenter the other day that told me that he had billed $80000 for the last two month's work. Just him and a helper. He said he usually turns $30k per month in revenue working 5 long days a week. Now, imagine the margin that guy must be making with very little overhead. I must be stupid to be a cabinetmaker. Just go get your insurance and go do what you are good at.
From contributor S:In his famous book about business, "E-Myth", Michael Gerber calls people like the questioner (and all the rest of us that decided to start a business based on an affinity for woodwork) "technicians with entrepreneurial seizures." My advice: buy Rhonda Abrams book "The Successful Business Plan" and use it! Do not start a business without a carefully considered business plan.
From contributor A:On the subject of business plans, a friend I know had a business class at a local university do up his plan. It is a regular part of the class' curriculum. It took awhile for the class to complete it, but it was free and better than what he probably could have done himself. Just food for thought.

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